Question

1. Flexible Budget for Selling and Administrative Expenses for a Service Company

   Digital Solutions Inc. uses flexible An accounting device used to plan and control resources of operational departments and divisions.budgets that are based on the following data:

   Sales commissions	8% of sales
   Advertising expense	15% of sales
   Miscellaneous administrative expense	$10,000 per month plus 4% of sales
   Office salaries expense	$50,000 per month
   Customer support expenses	$20,000 per month plus 30% of sales
   Research and development expense	$75,000 per month

   Prepare a flexible selling and administrative expenses budget for October for sales volumes of $500,000, $750,000, and $1,000,000. (Use Exhibit 5 as a model.)

   Digital Solutions Inc.
   Flexible Selling and Administrative Expenses Budget
   For the Month Ending October 31
   Total sales	$500,000	$750,000	$1,000,000
   Variable cost:
   Cash Office salaries expense Sales commissions Supplies expense Wages expense	$	$	$
   Advertising expense Cash Office salaries expense Supplies expense Wages expense
   Miscellaneous administrative expense Office salaries expense Prepaid insurance Rent expense Wages expense
   Customer support expenses Rent expense Research and development expense Supplies expense Wages expense
   Total variable cost	$	$	$
   Fixed cost:
   Insurance expense Miscellaneous administrative expense Rent expense Supplies expense Wages expense	$	$	$
   Insurance expense Office salaries expense Prepaid insurance Rent expense Wages expense
   Customer support expenses Insurance expense Rent expense Supplies expense Wages expense
   Insurance expense Rent expense Research and development expense Supplies expense Wages expense
   Total fixed cost	$	$	$
   Total selling and administrative expenses	$	$	$

Answer 1